US embassy cable - 04HANOI2665

UNCLAS HANOI 002665 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IPC WILSON AND EAP/BCLTV 
STATE ALSO PASS USTR BURCKY/ALVAREZ AND BRYAN 
STATE ALSO PASS USPTO FOR URBAN 
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP 
USDA FOR FAS/FAA/AO HUETE 
USDOC FOR LASHLEY AND 4431/MAC/AP/OPB/VLC/HPPHO 
USDOC ALSO FOR ITA/TD/OTEA/JJANICKE AND ITA/TD/SIF/CMUIR 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, ECON, VM, IPROP 
SUBJECT: VIETNAM:  CHANEL CONCERNED ABOUT EXPORT OF FAKE 
COMSMETICS AND FRAGRANCES FROM VIETNAM 
 
1. (U) This cable includes sensitive business information. 
Please protect accordingly. 
 
2. (SBU) In a meeting September 22 with Econ/C and Econoff, 
three representatives of Chanel voiced concerns that a 
Vietnamese company may be producing and exporting 
counterfeit cosmetics and fragrances to the United States 
(and possibly other markets).  Robin Gruber (from Chanel 
USA), Bernard Lehmann and Catherine Cruse (both from French 
Chanel) explained that Chanel had recently seized 
counterfeit fragrance and cosmetics products in the United 
States.  Their subsequent investigation traced the products 
back to what they believe is a factory belonging to the 
Saigon Cosmetics Corporation (SCC) located in Can Tho 
province. 
 
3. (SBU)  Chanel's Gruber told Econoffs there are only three 
legitimate points of sale for Chanel products in Vietnam: 
the duty free shops in both the Hanoi and HCMC airports and 
a duty free shop in downtown HCMC.  However, while in HCMC 
the day before, they were able to purchase very convincing 
fake Chanel lipsticks in HCMC. 
 
4. (SBU) Chanel is disturbed by the sale of fake products 
locally for health and safety reasons, as well as because 
Chanel eventually plans to market its products more 
extensively in Vietnam.  However, Chanel is more concerned 
that Vietnamese companies may be venturing into exporting 
counterfeit goods.  Gruber stressed that Chanel is 
interested in addressing the issue of exportation before it 
becomes a bigger problem in Vietnam.  In addition to the 
meeting with Econoffs in Hanoi, the Chanel reps met with an 
attorney (who specializes in intellectual property rights 
cases) at the firm of Baker & McKenzie in HCMC to discuss 
their concerns. 
 
5. (SBU) Gruber asked Econoffs for guidance on how Chanel 
should proceed and the best way to raise their concerns with 
the GVN.  Econoffs suggested Chanel proceed with finding 
local counsel (either an attorney or an IPR agent) to 
assemble the facts of the case and identified the National 
Office of Intellectual Property (NOIP) under the Ministry of 
Science and Technology (MOST) as the GVN agency in charge of 
trademark issues.  Econoffs also provided the names of 
several additional experts on IPR issues in Vietnam; 
encouraged Chanel reps to meet with appropriate officials at 
the French Embassy and EU Mission in Hanoi; described USG 
technical assistance to the GVN on IPR enforcement; offered 
to provide Chanel with more information about the Saigon 
Cosmetics Corporation; and offered to provide assistance in 
pressing the matter with the GVN. 
 
6. (SBU) Comment:  SCC was established 20 years ago and 
exports a variety of cosmetics to Asia, Europe and the 
United States.  SCC was a state-owned enterprise but is now 
a holding company.  Its shares are over the counter rather 
than in the stock market.  The General Director of SCC has 
been a member of Vietnam's National Assembly since 1998. 
SSC products are produced in Ho Chi Minh City alone; SCC has 
only a representative office in Can Tho, the alleged source 
of the counterfeit goods.  If there is a connection to SCC, 
it could be through an employee rather than the company as a 
whole. 
 
7. (SBU) Comment continued.  Lack of effective IPR 
protection remains one of the biggest challenges for 
Vietnam's trade and investment relations with the United 
States.  Despite GVN efforts to improve Vietnam's legal 
framework for IPR, a couple of high profile police raids, 
and significant USG technical assistance, pirated and 
counterfeit products abound in markets throughout Vietnam. 
The Chanel case is even more worrisome, however, because it 
is the first time a company has complained to us about 
allegedly counterfeit goods of Vietnamese origin being 
exported to the United States rather than sold in the 
domestic market.  End comment. 
 
MARINE